Alcohol-free beer brand Freestar is to cease trading and declare insolvency.
Freestar, which was listed with Tesco, Sainsbury’s, Ocado and on Amazon, will wind down having found it “very difficult to raise the required capital” to further scale the business, according to co-founder Felix von Hurter.
Freestar completed a successful crowdfund in April, hitting £570k – which included a £200k commitment via private placement to new and existing investors.
However, von Hurter said the brand opted not to take the funds after deciding it would have been “an irresponsible thing to do”.
“We had some money committed, but it wasn’t enough,” he said. “We deemed it wasn’t going to give us enough runway.
“We needed to grow the team to be able to win more distribution, because the only way we were going to make sustainable business was by getting more volume, and being able to negotiate a lower price from our brewer.”
Freestar’s alcohol-free brews were produced under contract in Belgium. Von Hurter said the brand had been unable to hit the volumes needed to reduce the cost of buying its liquid and improve margins.
He said supermarket sales since landing a 300-store listing with Tesco in December 2022 were “fine” but increased competition in alcohol-free had been a challenge.
Freestar had been “working up a plan” with Sainsbury’s and Tesco to swap out its lager for its IPA because of the competition in alcohol-free lager before making the decision to wind down, he added.
“Alcohol-free beer is so different to craft beer,” he said. “Because the big macro brands are making pretty decent liquid, and their distribution and pricing is so strong, it’s very difficult to compete.”
“For a single-SKU, premium alcohol-free, lager is a very difficult nut to crack. You’ve got brands like Asahi 0.0% or Peroni Nastro Azzurro 0.0% at £15 for 12, and we’re £1.80 for one. It’s a difficult channel.”
Von Hurter said Freestar was now in the process of selling off its remaining product to realise as much capital as possible before handing over to insolvency practitioners.
He said only he and his business partner Eddy Dallas remained employed by the business, down from a peak of eight members of staff last summer.
Asked how much capital Freestar had raised since its inception in 2019, von Hurter declined to comment.
“The conditions out there for small businesses trying to raise are just so tough, and we’re not going to be the only ones going through this,” he added.
The news comes just seven months after the brewer declared it had more than quadrupled its year-on-year website sales during the first week of 2023.